for newby, read carefully There’s gold in that thar’ old mine
In April, Québec-based Ressources Appalaches reached a major milestone. It began mining operations at the Dufferin gold mine on Nova Scotia’s eastern shore, extracting ore and stockpiling it at the site. “Starting a mine is very rare and we’re proud to have put it into production in Nova Scotia and done it as rapidly as we have,” says Alain Hupé, the company’s president and CEO. “I think five years from exploration to installation is pretty fast.”
Indeed. A pure exploration play might take a decade, and sometimes much longer, to go from a concept to a producing mine. But the speed with which Ressources Appalaches was able to go from acquiring the Dufferin property in 2009 from a private company for $4 million to producing ore this spring speaks to the advantages of re-starting production at old mines – if you can.
A big advantage is infrastructure. Old mines already have it, so much of the infrastructure needed to get a mine up and running doesn’t have to be built and paid for by the proponent. That saves companies time and millions of dollars in capital. “The road is built. The power line is there. The buildings are there. There are a lot of advantages,” Hupé says.
Those advantages have Hupé and Ressources Appalaches busily ramping up production to full capacity of 300 tonnes of ore per day. But the company doesn’t plan to stop there; its goal is to double production to 600 tonnes per day by 2016. The mine, which will employ 70 people, produced its first batch of gold in May and plans to produce between 20,000 to 25,000 ounces of the precious metal annually.
Hupé says there are enough defined resources on the mine site to keep producing gold for three years. However, he says there is potential on the site to mine for nine years. The company will spend the next year doing a combination of exploration and definition drilling. It also has four other mining properties to the east of the Dufferin site. Hupé says the company intends to do exploration drilling on those properties with the hope of finding more gold veins that could keep the mine producing even longer.
The company estimates during the mine’s first year of operation it will cost $800 to produce an ounce of gold. With spot gold prices averaging US$1,240 in early June, Ressources Appalaches stands to make a tidy profit from reviving production at this mine, located 150 kilometres northeast of Halifax. “A lot of the uncertainty is gone because we have a lot of old infrastructure that we’ve restarted. We know it’s worked in the past and there are no problems anywhere,” Hupé says. “The access to underground by galleries is cheaper. And the skilled labour we have been able to find in Nova Scotia, namely experienced miners, helps us to maintain a really low cost of the operation.”
Ressources Appalaches’s recycling strategy seems to have resonated with fickle investors. In May of 2013 it secured a US$10 million loan from New York-based Lascaux Resources Partners LLC. The loan gave the Quebec company the capital it needed to complete the refurbishment of the Dufferin mine and advance the project to the production stage. In late May, the company announced it had raised another $1.2 million through a private placement of shares. The company says it will use the cash to extend and define resources at the Dufferin mine.
While Ressources Appalaches is busy with the Dufferin mine, the company has to look to the future as well. Someday there will be no more gold to extract from Dufferin, and the mine is the only one in the company’s portfolio. If the company wants to grow and increase its share price, it will have to find new prospects to exploit. With the success his company has had re-opening the Dufferin, Hupé says the company may revisit the strategy.
“We are not looking for other properties right now. But with the experience we’ve acquired to bring the Dufferin mine into production I already have eyes on other properties,” Hupé says. “I cannot name them, but I think there are at least three or four other properties like Dufferin in Nova Scotia.”
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